Michael KurschilgenDoes Knowledge About the Presence of a Maverick in the Market Influence the Price Level?

Michael Kurschilgen
Does Knowledge About the Presence of a Maverick in the Market Influence the Price Level?

Michael Kurschilgen is Assistant Professor of Managerial Economics at the Technical University Munich, Germany. He received his doctoral degree in economics from Friedrich Schiller University Jena before becoming a Postdoctoral Reserach Fellow at the Max Planck Institute for Research on Collective Goods in Bonn.
Kurschilgen’s area of research is the interface between economics, social psychology, and law. He is a member of the Young Academy of Sciences and Humanities of the German state of North Rhine-Westphalia.

Area of Research

Applied Microeconomics, Behavioral and Experimental Economics, Law and Economics, Philosophy and Economics, Public Economics

"The Max Planck Society is Germany's most successful research organization. Since its establishment in 1948, no fewer than 18 Nobel laureates have emerged from the ranks of its scientists, putting it on a par with the best and most prestigious research institutions worldwide. The more than 15,000 publications each year in internationally renowned scientific journals are proof of the outstanding research work conducted at Max Planck Institutes – and many of those articles are among the most-cited publications in the relevant field." (Source)

Institute

"Many goods are not obviously best provided by unregulated markets. This does not necessarily imply that government does a better job. But research can do society a service in defining why markets have a hard time with some goods, and in comparing institutional arrangements aiming at their provision. In a precise way, the problem is defined by the concept of public goods. Capitalising on the theory of mechanism design, it can be further improved. Using experimental methods, it can be put into perspective. Yet some social dilemmas are better analysed in alternative categories. It may even be preferable to start analytically from the political decision to intervene into markets. The institute tackles these questions from the combined perspectives of economics, law and psychology. While the institute started with applications from environmental problems, current work focuses on antitrust, regulation and financial stability." (Source)

Map

The experiment presented in this video constructs a heterogeneous duopoly of firms – on the one hand a firm with an internal structure leading to low prices, and on the other hand a firm acting collusively in price-setting. MICHAEL KURSCHILGEN explains that transparency about the competitor’s internal structure hampers tacit collusion: If the collusive firm is aware of the other firm’s internal structure, the firms will compete on prices and prices will decline; otherwise, both firms will collude on price-setting and prices will rise.

LT Video Publication DOI: https://doi.org/10.21036/LTPUB10021

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